Friday, March 1, 2024



Crypto for Advisors is changing. I’m Sarah Morton, the new editor of this newsletter. Think of me as your tour guide on an ongoing journey through the evolving crypto ecosystem. I’m here to curate timely, relevant and thought-provoking content as well as answer pressing questions that clients ask. But first: Why me?

My learning journey into the world of crypto started more than six years ago. I was drawn to blockchain technologies and the new opportunities driven by what we now call the new digital money (aka “crypto”) for the finance industry. This journey led me to co-found MeetAmi Innovations, where we work daily with advisors, financial professionals and various digital asset community players to understand their challenges in answering client questions related to investing in crypto and digital assets.

You’re reading Crypto for Advisors, CoinDesk’s weekly newsletter that unpacks digital assets for financial advisors. Subscribe here to get it every Thursday.

There is no question that current and next-generation investors are interested in digital assets (cryptocurrencies, tokens, smart contracts, and other digital representations of value). Just yesterday, BlackRock CEO Larry Fink suggested: “Bitcoin could revolutionize finance.” If he’s right, it would amplify demand from investors (recently surveyed by BCG) and their financial advisors for guidance on how to think about investing in this emerging asset class. And it’s not a simple answer.

Recent news adds to the complexity. In just the past couple of months

  • The SEC has sued high-profile crypto Exchanges Binance and Coinbase.
  • A bevy of financial companies applied for bitcoin spot ETFs in the U.S.
  • Globally, the U.K. and Hong Kong made bold moves toward becoming digital asset financial hubs.

A recent Coinbase study showed that over 50% of Fortune 100 companies have started crypto, blockchain and Web3 projects. Such studies raise bigger questions like: How will these advancements affect digital assets? How will advisors navigate the complexities and rapidly changing nature of digital assets?

Advisors have a significant opportunity to support today’s clients and meet the needs of the next generation of investors – as long as they have a roadmap to navigate the digital-asset landscape.

This newsletter is here to help point the way. Each week Crypto for Advisors will share thought leadership from the industry, answer common and pressing questions from clients, and point to resources to better understand this rapidly evolving asset class.

If you have questions for our advisor network – or have topics you’d like to see covered – simply reply to this email, and we’ll try to answer them in future newsletters.

Thanks for subscribing – your readership means a lot to us.

Ask an Advisor

I educate financial advisors about digital assets. Here are the three most common questions they ask about digital asset investing.

Adam Blumberg

Q: Is investing in digital assets secure? I’ve heard of people losing all their money.

A:

It can be secure if you know how to hold the assets and do your homework regarding custody.

Digital assets and crypto are based on self-custody, meaning I hold my own assets in my own wallet(s).

However, we often use centralized custodians – such as an exchange – to hold assets for ourselves and clients, as they take on much of the technology’s heavy lifting. For both you and your clients, it’s important that you research the custodian to ensure they don’t commingle assets and are solvent.

Q: Do digital assets have real value?

A:

Each crypto asset has its own value proposition and investment thesis. For example, bitcoin is often viewed as a hedge against inflation, government and banks. Ether is used to run applications on the Ethereum network. Other tokens derive their value from cash flows.

Advisors should understand some of the investment theses and value drivers of various crypto assets to properly evaluate them for client portfolios.

Q: What are the risks of investing in digital assets?

A:

We’ve already talked a bit about custodial risk. Cryptocurrencies are also volatile, which poses allocation risks in client portfolios, especially with clients who may need liquidity. Many of the projects and protocols the tokens represent carry their own risks, which can be deeply technical and complicated to understand.

We don’t expect advisors to evaluate all the risks on their own, and we’re seeing more models and services which help determine crypto-asset risks as they relate to client portfolios.

Adam Blumberg is the co-founder of Interaxis, a company dedicated to educating financial professionals about digital assets.

Keep Reading

News of impending rejection from the SEC over language concerning surveillance agreements have led to a wave of updated refilings

Are bitcoin ETFs coming? The SEC required clarity from the applicants, but didn’t say, “no.”

Financial Services and Markets Act granted Royal Assent by King Charles, making crypto trading a regulated financial activity in the UK

The U.K. implemented laws for stablecoins and cryptocurrencies. Which countries will follow this framework and what can we learn?

$84 trillion wealth transfer at stake as millennials, Gen X look to cryptos: BofA study

The largest transfer of generational wealth is happening as Web3 emerges. If you are looking to meet the needs of the next generation of investors, there’s a lot to consider.

Edited by Pete Pachal.



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